Geopolitical Update: Could the AfD Party spoil Merkel’s victory in German elections?

Conservative anti immigration AfD advances the most in last few days

Could German voters hand a surprise in German elections this Sunday Sep 24? I am not pointing at Merkel’s CDU-CSU Christian center-right coalition missing the first spot. Most analysts speak about a sweeping victory for Mrs. Merkel and that Mr. Schulz’s SPD will carry the 2nd spot. Thanks to German elections’ predictability in recent years Merkel and Schulz have been taken for granted already, making the race for the no 1 and 2 spots almost boring. In recent days most of the attention has shifted to the third spot. That race has been amazingly tough and close. At least until last week. Here is the news: The much dreaded conservative anti-immigration party Alternative für Deutschland (Alternative for Germany) is shooting up despite a massive media barrage.

The latest polls show the AfDhas risen over the past ten days from a mere 10% to 13%. That is an earthquake in steady and almost “boring” post-war German politics. Thus, the AfD could deliver a certain shock on Sunday, becoming Germany’s 3rd strongest party, and spoiling Merkel’s party.

German media is at a loss – after having successfully shaped public opinion about the AfD during one year by totally overlooking it or linking it to right wing extremism, it is now struggling to report its significant “last minute” rise in a balanced way. Still, part of the media bashing was self-inflicted, because the former leader Mrs. Petry did not distance herself quickly enough from some elements in her party, that had made racist comments.

In my analysis the late rise of the AfD (Alternative for Germany) has two main drivers: Merkel’s behaviour at some public debates and the fact that German media may have gone too far in bashing the AfD. Thus, the media campaign against the AfD may be backfiring.

Sure, Mrs. Weidel and Mr. Gauland did a decent job advancing their AfD views for Germany, just as did Petry before them, but it was Mrs. Merkel that may have triggered the late shift in favour of the AfD. Mrs. Merkel shifted to the liberal Left earlier this year to win votes from Schulz, but lately she talked tough against immigrants and German big car makers – That made her less credible among certain conservative circles, that seem to be looking for another conservative alternative to send a message. And Merkel added to it. At a debate a school official lamented the mass arrival of immigrants was causing major problems and debates at school boards, but that in German public discourse to talk about those issues was a tabu. Many people felt Mrs. Merkel reacted unnerved that someone would dare to say that, and her reaction confirmed what the school official had said. I think she should have shown empathy and understanding for the many stressed school officials.

Some German voters feel that the powerful & influential German state media (at federal and Bundesland level) made sure that mass immigration was not a major openly debated topic during these elections. It was reported about it, but this was often a “managed” exercise. And I think the AfD reacted to this media “management” with a shrewd tactic: while most German parties shifted towards the left-liberal camp to save the EU & the EURO, the AfD shifted even further to the right camp. This made the gap between the AfD and the rest even bigger. So much, that even the Chair of the AfD, Mrs. Petry has become uneasy about some of the language used by Mr. Gauland. Mrs. Petry has many conservative followers at the AfD that shun extreme language, but if Weidel-Gauland succeed in bringing the AfD into the German Bundestag as 3rd largest party, I doubt moderate conservatives within the AfD will reject Weidel-Gauland. In a way, success excuses the means. The ruling coalition, the media and the AfD are setting up the country for a showdown.

My conclusion in a nutshell

All in all, the AfD is benefitting from the fact that most German parties shifted to the liberal-left camp after BREXIT to rally behind the EU. There was a sense of the urgent need to rescue the European Integration process. Smartly or dangerously the AfD shifted its “tone” even further to the right.

With most Germans well off economically, analysts are convinced they will support the status quo. The angry, impoverished or disenfranchised 25% of Germans cannot tip these elections, but they could upset Berlin. Germany stands out indeed: it is one of the few developed economies, where a big part of the middle class has seen annual increases in salaries over the past ten years. Mr. Macron will likely use the next 3 months to expand his leadership role in Europe and beyond.

Since 2016 I have continually maintained – and for 9 months against consensus – that the Far Right will not shape any major government in the EU. I said repeatedly that the fears about a rise of the Far Right in the EU were overdone, because both France & Germany would vote either liberal or left in 2017. So far this main scenario for Europe is unfolding and I see the EU shifting further to the liberal Left after Fall 2017. The steady secular rise of the Right is energising all center and left parties to push forward their globalist or integrationist agenda. But, Europe is not America, in Europe the liberal-left camp is much larger than the right or conservative camp. Where others saw the collapse of the EU, I saw and continue to see much more power concentration and a European Super State in the horizon. This implies that Germany will try to further deepen her strategic alliance with China.

A clash is coming and Germany is steering the EU into China’s sphere of geopolitical & military influence. For now at least. Worthwhile close monitoring.

Christian Takushi

Macro Economist & Strategist – 23 Sep 2017 – Switzerland

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We are an independent geopolitical research boutique. We identify & analyse risks that are underestimated by consensus, but relevant for the economy. Christian Takushi is a Swiss-Peruvian Macro Economist & Geopolitical Strategist. He has served 25 years in the global investment industry, appeared on Bloomberg TV, radio, newspapers, and lectured at elite schools.
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